Bhutan in Rupee debt trap, not so happy now!

It’s a fact. the Gross National Happiness of the dragon kingdom is sliding. Bhutan is caught in a rupee debt trap. How can it extricate itself?

Bhutan’s economy and the rupee shortage it faces are two immediate issues its citizens wish to see straightened out in the next five years of the new government’s reign.

During election campaigns, some candidates of the now ruling party that forms the government had said they would not borrow more money, but would instead try reviving some of the indigenous businesses that would bring the country revenue, in rupees.

It would be interesting to see how, without borrowing, Bhutan could satiate its unceasing thirst for the Indian rupee, considering that almost 90 percent of the material required for economic activities comes from India.

Apparently, without borrowing, it would be difficult for the Bhutan to be able to refund what it had so far.

As has been pointed out by some local economists, the economic crisis of Bhutan is lagely a result of its ambitious power project planning. Bhutan’s attempt to have all 10 mega hydropower projects take off at a time this year has turned out to be a rather tall order.

If Bhutan faces an such unfavourable situation with the start of the three power projects of Punatsangchu I, II and Mangdechu, there may be more financial challenges in the next five years.

There is no question of not borrowing more from India.Not borrowing would only result in the country having to forgo some crucial development activities.

Many construction or essential items have to be sourced from India, for which the rupee is required, and the country is apparently short of Indian rupees.

Not borrowing more rupees would only lead to a persistence of the current economic situation, or it worsening.

One of the measures suggested was to revive the lottery business the previous government had closed for on moral and ethical grounds. Even if the lottery business is allowed to be reinstated, at the most it would bring about Rs 200M.

What good is that amount, when the government’s promise to inject Rs 3billion into the financial institutions to ease the current shortage may be be drained out within a week or so?

Local economists calculated this in terms of the Rs 14 billion the Bhutanese market, hungry for rupees, consumed in less than three weeks.

Borrow rupees we must until the country’s economy stabilises, which experts expect to see this happenin the very long term.

Until then, it is hoped the Bhutanese market would have learnt some financial discipline and realise that the rupee, after all, is also a foreign currency.